DAILY DEALS… Do they work? That depends on how you use them!
Imagine you run a typical daily deal.
If you sell 100 deals at £25.00 (normal price £50.00), you have a prospective revenue of £25.00 per deal.
So a quick calculation: £25 x 100 deals = £2,500.
Next you need to subtract approx 30% in commission for the daily deal provider, which leaves just £17.50 for you.
The profit on a deal like that for you is probably around £5, meaning a total profit of just £500 for serving 100 people.
WHAT IS THE ALTERNATIVE?
Imagine if instead, you could sell just 35 covers at the full price – £50, you would produce the same revenue of £1,750! The major difference however, is that as the cost is the same, ALL of the extra £32.50 per deal must be pure profit!
That means you would make a profit of £1,137.50 for serving only 35 customers!
Additional things to consider:
- You also need to take into account the additional staffing costs and the service for the additional 65 covers
- If you run a daily deal, your existing customers may decide to save money and purchase a voucher deal instead of paying full price. So you lose twice.
- You may be perceived as a discount restaurant and receive negative effects on your brand.
- Customer reviews and feedback may suffer on the back of quantity before quality!
SO WHAT DOES THAT MEAN FOR MY RESTAURANT?
Using the above…just 15 customers spending £50, would cover the revenue cost of our most expensive monthly marketing package!
THE LONG TERM EFFECTS
The way we do this is to build up your databases and engagement, so you can take back control of your marketing. One of our restaurant clients we work with did daily deals before we worked with them, so we wrote about it back in 2013!
If you want to see how it works, they are still working with us nearly 5 years later. We can do the same for you, just reply to the email or give us a call.